Tax Changes that Benefit M&A

On July 4th, the “One Big Beautiful Bill Act” was signed into law, bringing with it several tax provisions that significantly benefit both buyers and sellers in M&A transactions. Aside from making the current individual tax rates and Qualified Business Income Deduction permanent, here are some highlights: 1. A 100% bonus depreciation is back for new and used tangible personal property (such as machinery and equipment) placed into service after January 19, 2025. The immediate write-off of allocated purchase price shields post-acquisition income. 2. The 30% interest deduction limit for 2025 is based on EBITDA, not EBIT, which boosts buyer cash flow on leveraged deals. 3. The 100% tax-exempt gain at sale of Qualified Small Business Stock after a 5-year hold will now allow 50% after 3 years and 75% after 4 years for new issues. The initial assets ceiling increases from $50MM to $75MM. 4. The Pass-Through Entity tax election is preserved, while the itemized deduction cap for state and local taxes for 2025 increases from $10,000 to $40,000 through 2029 with income phase-out. 5. Overall, valuations should rise from the improved ROI after-tax expected for buyers under the new rules. I will have Podcasts, AM&AA Midwest session, and articles to cover the latest changes. As always, I stand ready to assist. Best regards, Bill